A debt usually prescribes after three years after the debt has been incurred and has subsequently not been acknowledged within three years. However, prescription may be interrupted under certain circumstances or upon certain acts.
The prescription of debts in South Africa is regulated by the Prescription Act 68 of 1969, together with the National Credit Act 34 of 2005.
A debt is a monetary obligation one person owes to another as a result of services rendered or money lend. It is an amount due and payable to that person who is owed. In simple terms, a prescribed debt is a debt which has basically “expired”. Once a debt has prescribed, in other words three years has lapsed and the credit provider or debt collector has not instituted any legal proceeding or demanded payment of the said amount, the debt shall be deemed as prescribed.
There are different prescription periods for different types of debts. Same is best explained as follows:
- Contractual debts – 3 years;
- Cheque debts (any negotiable instruments) – 6 years;
- Money owed to the State (loan debt, land leased debt, land purchase debt) – 15 years;
- Mortgage bonds and tax related debts - 30 years.
However, prescription may be interrupted in the following ways:
- Acknowledgement of debt or making any payment towards the debt;
- Being outside the South African Borders;
- Legal action being instituted against you pertaining the debt.
The amendment to the National Credit Act made in 2015 makes it illegal for a credit provider or any debt collector to collect debt on a prescribed debt unless they can successfully prove that the debt has not prescribed.